The semiconductor industry has had a challenging September. The sector has underperformed the S&P by some 6% during the month (See Chart Below). The space is worth reviewing for possible bargains. Here are two cash rich, specialty semiconductor manufacturers worth considering.
"International Rectifier Corporation (IRF) designs, manufactures, and markets power management semiconductors for distributors, original equipment manufacturers, and contract manufacturers in the Americas, Europe, and Asia." (Business description from Yahoo Finance)
4 reasons IRF could be a bargain at $16 a share:
- IRF has started to attract interest from insiders. Two insiders pick up some $100 in new shares in late August.
- The company has over $350mm in net cash on its balance sheet (30% of market capitalization).
- The stock is selling at 94% of book value and at the bottom of its five year valuation range based on P/S. The median analysts' price target is $22 a share on IRF.
- The stock has some good median term technical support here. (See Chart)
4 reasons AVGO has value at under $35 a share:
- The 17 analysts the cover the stock have a median price target of $42 a share. Canaccord Genuity and UBS initiated the stock as a "Buy" in the third quarter.
- The company has almost $1B in net cash on its balance sheet and the stock yields 1.8%.
- The stock is selling in the bottom third of its historical valuation based on P/S, P/B, P/CF and P/E.
- The stock has some short term technical support just below its current price level (See Chart)
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AVGO over the next 72 hours.